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They said, "you got shutdown for making too much money". <-- Tax Issue

Discussion in 'Affiliate Programs' started by wasted, May 16, 2011.

  1. wasted

    wasted Jr. Executive VIP

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    Hey Guys,

    I was wondering if anyone has experienced this before:

    Recently I received an email from an affiliate program I am apart of, they are within Commission Junction and in the past two months I have produced over $10,000 in revenue with them. That's not my commission, I make about 10% from them.

    Regardless, I get an email that states that due to me being a NY resident I can no longer promote their program because they have to pay sales tax to all products sold in NY or something like that. The products are tangible products.

    They sent me a from in which I can fill out to stay in the program, the form pretty much states that I can't promote in NY. However, even after signing the agreement they dropped me from the program. The form also stated if I promtoe in NY i'm liable for sales tax...

    It was a little confusing, I don't care because there are 10 other programs to use, just all the others only offer 8% commission.

    Anybody experience this ever?
     
  2. 1337WuLF

    1337WuLF Senior Member Premium Member

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    An advertiser on CJ terminated me because I was earning over 5k. Was an leadgen.
     
  3. synfig

    synfig Regular Member

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    LOL. This is the reason i don't prefer CJ at all. This is definitely not a good idea to kick the people who make you money.
     
  4. Narrator

    Narrator Power Member

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    Thats weird, I wonder why they don't just charge the consumers sales tax.
     
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  5. johnsonasu35

    johnsonasu35 Registered Member

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    Sounds ridiculous. Aren't you 1099 anyways. They should not have to be responsible for anything dealing with you and NY taxes.
     
  6. Sako94

    Sako94 Junior Member

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    ive had same issue, im sticking with Googles AD program now and no problems so far, good luck!
     
  7. tiffany10

    tiffany10 Newbie

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    CJ is not worth it
     
  8. ronywilliam

    ronywilliam Senior Member

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    Thats something seriously strange, never heard this before...
     
  9. Enigma32

    Enigma32 Jr. VIP Jr. VIP Premium Member

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    Uh, yea, this is not new. It's nicknamed "the amazon law" or something like that. Amazon are actively fighting it to the death.

    Basically, the way sales tax law traditionally works is this: If the company has a physical presence in a certain state (nexus), they must collect sales tax for that state. Typically that means anywhere they have an office or distribution warehouse, and is limited to a handful of states at most. Even for big guys like amazon.

    NY decided that if the company has 10k of AFFILIATE sales, that affiliate is now considered a nexus/physical presence in the state and they must collect sales tax.

    They also are pushing a movement to bring this to other states. This is devestating to ecommerce because it would eventually mean the rediculous administrative task of tracking a million different state, county, and municipality taxes across the country. Plus it eliminates the benefit most people enjoy of not paying sales tax for online purchases (although technically you are supposed to pay use taxes, but good luck to the states enforcing that)

    Lookup news articles on fatwallet, the same exact thing happened in their state. They simply moved offices to their neighboring state because its rediculous.

    Move your location to another state, as this is only going to get worse for you working out of new york. Even if you stay and live in new york, open a box somewhere and maintain your address there on paper with everybody. The trend is becoming to outright ban NY affiliates.
     
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    Last edited: May 17, 2011
  10. The Doctor

    The Doctor Jr. VIP Jr. VIP

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    I've never liked cj because they will screw you quick if an advertiser says anything
     
  11. wasted

    wasted Jr. Executive VIP

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    Yes it is definitely going to be interesting to see what happen when the "law" catches up to Internet Marketing.

    Thanks for your comments, I have now received two of these letters...
     
  12. angelas111

    angelas111 Jr. VIP Jr. VIP Premium Member

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    just get yourself a delaware or nevada corp and open a new account or tell the advertiser you "moved".
     
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  13. wasted

    wasted Jr. Executive VIP

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    angelas,

    I just filed for an LLC in Delaware I think that this will do the trick. It was for a new business unit, but I'm going to throw some affiliate marketing under it as well.
     
  14. GreenGoblin

    GreenGoblin BANNED BANNED

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    Best advice right there
     
  15. seojumper

    seojumper Regular Member

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    extremly stupid of your sponsor or CJ, that they did not recommend you to "move".
     
  16. Twilight Wanderer

    Twilight Wanderer Newbie

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    The outcome of the fight that Amazon is involved in really is something that should be paid attention to because what happens afterward will be quite significant for those involved in ecommerce. With so many states in the U.S. suffering from budget deficits, politicians are looking for any means to increase revenue, so it's no surprise that this is an issue that's cropping up elsewhere in the country.
     
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  17. goads

    goads Junior Member

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    Dude - go set up a Nevada business with a phone number, and address.
     
  18. Godspeed

    Godspeed Regular Member

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    CJ sucks long time. You can find better offers on other networks.
     
  19. Enigma32

    Enigma32 Jr. VIP Jr. VIP Premium Member

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    I'm sure they want to avoid some sort of fraud claims by encouraging you to pretend to move. Your money isn't worth that headache.

    However, should you approach them having suddenly "moved" to nevada or delaware -- they really don't care. They know what you're doing, they'll most likely just give a thumbs up to the monitor as they reactivate you.

    Florida or nevada are really the best.

    Florida lacks an income tax, so that is an obvious benefit. Relatively low filing and administrative costs.

    Delaware is more beneficial for public corporations, their tax structure is a little weird.

    Nevada is the best. They offer the best protections and even put down $50,000 or something guaranteeing your LLC will never get pierced. The whole idea of an LLC is that it protects YOUR assets if your LLC ends up in court. Unfortunately, they are very often pierced and your assets are all on the table. Nevada does have higher filing fees, but if you have money to lose then you really don't care about a few hundred dollars more for the protection now do you?